Friday, April 16, 2010

Leaving the Mailstram: Saturation Advertising

This blog had previously reported on the actions of Valassis to use alternative delivery for its saturation advertising products.  Last month, PowerDirect, a California company that manages a nationwide network providing door delivery of advertising introduced a new direct-to-door, co-op polybag media program announced that it will launch its service in Las Vegas on July 3. 

PowerDirect like other firms trying to compete with the Postal Service for a share of the market for delivery of print advertising to households is a firm focused on local delivery of advertising.   Their business model allows them to compete with the Postal Service on both a price and service basis.  The success of these firms suggests there is a business model that allows for home delivery of advertising at below $1 per stop and more than likely at a cost that makes their advertising products competitive with Postal Service delivery.   This business model is not the model of FedEx, UPS that shifts parcels going to remote locations and those that generate less than $3 to $4 in revenue to the Postal Service through their services integrating pick-up and transportation to near destination by UPS or FedEx and delivery by the Postal Service.  

In its Press release, Mike Hiskett, VP of Sales at PowerDirect highlighted the Postal Services problems to press the case for the new product. “We have seen the many challenges that our retailer clients face in trying to reach consumers at home on the weekend when they are most likely to make purchase decisions and shop,” states Mike Hiskett, VP of Sales at PowerDirect. With shrinking newspaper circulation, limited Total Market Coverage (TMC) programs, and the prospect of a Saturday postal-service cutback, many of our clients are seeking a more reliable weekend marketing medium to drive incremental sales."

The Postal Service can expect more and more firms in the advertising and periodical delivery business to begin nibbling away at what it perceives to be an impenetrable market.  These firms know now that they can compete on price.  Their challenge going forward is to convince customers that they can compete on service and investment return.


Postal Sanity said...

Saturation Mailing may only be the start. Switzerland based Quickmail delivers pre-sequenced Direct Mail with a profit and 15% cheaper than Swiss Post. What is the outlook for the USPS exclusive access to mailboxes?

skep said...

I refuse to believe a plastic bag full of ads is gonna have much response compared to mail. I always look through received mail, but a bag full of ads is going to the trash intact.

Anonymous said...

Why does the USPS require an address on each piece in saturation mailings for city routes, but not for rural routes and contract routes? These bundles do not go through the FSS. Addresses are an unnecessary expense for the saturation mailer, which the USPS competition doesn't require.

Anonymous said...

Good point. There is absolutely no reason that any coverage should have addresses on them. I've been thinking that for years. It adds extra labor to every coverage when we should just be allowed to grab one for each customer instead of having to line up an address for each delivery. Not to mention the added cost to the mailer for printing addresses and sequencing these mailings.